What Could Mobile / Digital Payments Save Your City?

WHAT COULD DIGITAL PAYMENTS
SAVE YOUR CITY?
Over the last decade, the world has gone
digital. Communications, entertainment and
commerce have moved online—bringing
significant benefits to consumers, businesses
and economies.
In this new digital society, payments are more
important than ever—providing the foundation
for new experiences and business models. With
this explosion of connectivity, digital payments
are growing exponentially as well.
It took 60 years for Visa to reach 3 billion
accounts, but we’re now on the cusp of a true
revolution that will see this number explode.
Hundreds of millions of new connected
devices are coming online and they’re all ways
to pay or be paid. The Internet of Things is
expected to reach 20 billion devices by 2020
and these connected devices will be able to
facilitate a range of commercial experiences,
including payments.
However, alongside the digitization of
commerce and payments, cash continues to
play a large role in certain sectors and markets
around the world, which could potentially
hinder economic growth in these communities
and industries.
To better understand the impact cash
can really have on economic growth, Visa
By Visa commissioned economics consulting and
research firm, Roubini ThoughtLab, to analyze
the use, acceptance and cost-benefit impact
of physical versus digital money in 100 cities
across the world. “Cashless Cities: Realizing
the Benefits of Digital Payments” is a unique
study that quantifies the net benefits that
cities, their residents and businesses could
realize by significantly increasing the use of
digital payments.
The study demonstrates that economies that
are moving toward digital payments and away
from cash, could benefit substantially. The
study estimates that reaching an “achievable
level of cashlessness”—defined as the entire
population moving to digital payment usage
equal to top 10 percent of users in that city
today—across the 100 cities examined, could
result in total direct net benefits of up to
US$470 billion per year. These benefits are
derived from many factors, ranging from
time savings among consumers from cashrelated
activities, to increased sales revenues
among businesses, to reduced government
administrative costs.
There are many instances where cash is more
costly than digital payments. The study found
that cash and checks cost businesses 7.1 cents
of every dollar received compared to 5 cents of
every dollar collected from digital sources.
Unbanked consumers across the 100 cities
spend an average $7 to $15 a month on cash
withdrawal activities like check cashing. By
reducing their reliance on cash, each unbanked
consumer could save an estimated $84 to $180
per year, on average. Furthermore, the study
shows the greater adoption of digital payments
could lead to a reduction in cash-related crime,
which benefits not just consumers, but also
governments by reducing criminal justice costs.
The shift to digital payments could also have
a catalytic effect on the city’s overall economic
performance, including GDP, employment,
wage and productivity growth. The study
predicts the combination of greater economic
activity, lower crime and greater ease of living
could make these cities more attractive to
businesses, talent and tourists.
We’ve seen what immediate and longterm
benefits could stem from the greater
adoption of digital payments. So, what now?
What can cities and governments do to help
usher in a more cashless future? The study
sets out 61 actions in a detailed roadmap for
policy makers.
Here are just five immediate and
actionable steps they can consider
taking to reduce cash reliance:
1Undertake targeted financial literacy
programs to help welcome the unbanked
into the banking system and offer secure digital
payment solutions for government benefits to
those who do not have bank cards.
2Phase out cash and check payments to and
from the government by adopting an allelectronic
payment and disbursement system,
meaning all government benefits, relief funds, tax
disbursements, collection and other payments
made to and from government institutions are
shifted to digital format.
3Promote a clear, innovationfriendly
regulation framework
4Ensure that digital payments are a
key component to all “smart city”
plans and strategies
5Implement secure open-loop
payment systems across all
transportation networks
The report is also supplemented by an
online data visualization tool, which
can be used to explore the benefits of
a more cashless world.
From mobile payments using
scanned codes to cards using
biometric authentication, billions
of connected devices such as
smartphones, watches, cars and
fitness trackers are now able to
send (and receive) payments. The
data shows that as communities and
cities become less reliant on cash
and better equipped to offer fully
digital payment experiences, their
businesses and economies could
grow, allowing their populations to
benefit and thrive